Gold and silver are likely to hold their ground this week as traders await the Federal Reserve's FOMC meeting minutes, which will provide crucial guidance on monetary policy outlook. The precious metals market is anticipating key insights from the Federal Open Market Committee minutes, scheduled for release on Tuesday, alongside November's pending home sales data.

Record-Breaking Performance Across Markets

Both metals delivered exceptional performance during the holiday-shortened week, with gold and silver reaching new milestones across major exchanges.

Gold futures gained ₹5,677.00 or 4.23% during the week to touch a lifetime high of ₹1,40,465.00 per 10 grams on Friday. In international markets, gold climbed $165.40 or 3.77% during the past week, reaching a lifetime high of $4,584.00 per ounce on Comex.

Analyst Projections for 2026

Pranav Mer, Vice President at JM Financial Services, expects gold prices to potentially advance toward $5,000-$5,200 internationally and ₹1,50,000-₹1,55,000 on MCX in 2026. He emphasized that while similar returns to 2025's exceptional performance may not be replicated, underlying fundamentals remain supportive.

Prathamesh Mallya from Angel One projects gold prices could potentially reach ₹1,60,000 per 10 grams in the first half of 2026, driven by easing interest rates and anticipation of further Fed rate cuts.

Key Market Drivers for 2026

Analysts identify several factors that will continue to support precious metals:

• Monetary Policy Easing: Expected rate cuts enhancing gold and silver attractiveness
• De-dollarisation Trends: Portfolio diversification driving central bank purchases
• Global Trade Tensions: Safe-haven demand amid tariff policies and trade wars
• Geopolitical Uncertainties: Ongoing Russia-Ukraine conflict supporting safe-haven flows
• Industrial Demand: Strong requirements from new-age sectors for silver

Silver's Supply Constraint Challenge

Silver witnessed spectacular gains, soaring ₹18,210.00 or 8.14% to a new record of ₹2,42,000.00 per kg on Friday. The white metal's remarkable 15.04% weekly performance reflects strong industrial and investment demand.

China's implementation of export restrictions on silver from January 1, 2026, requiring companies to obtain licenses, is expected to disrupt global supply chains through 2027. As the world's largest silver consumer and leading producer of solar panels, electronics, and electric vehicles, China's policy shift adds significant supply-side support.

Market Outlook and Trading Activity

While trading activity will remain subdued this week with limited economic releases, analysts expect precious metals to maintain upward momentum in 2026. Central bank gold purchases have moderated compared to previous years but remain steady, supported by portfolio diversification needs and currency concerns.

Mer noted that Bank of Japan's rate hikes, escalation in global trade wars, and economic activity in the US and China will be closely tracked as key factors influencing precious metals performance.

Silver has emerged as one of the most dynamic commodities in recent markets, delivering exceptional returns across multiple timeframes and establishing itself as a standout performer in the metals space. The precious metal's surge reflects its growing importance in global markets and unique position as both an industrial commodity and investment asset, benefiting from a convergence of supply constraints and robust demand fundamentals.

Key Market Drivers Fuel Silver's Rally

Several fundamental and macroeconomic factors have contributed to silver's strong performance. The metal's recent inclusion in the U.S. Geological Survey's list of critical minerals has further elevated its profile among investors and policymakers, underscoring its essential role in technology and energy transition.

The market is experiencing persistent supply constraints, now in its fifth consecutive year of tightness, creating a bullish backdrop for prices. This supply squeeze has been compounded by steadily rising industrial demand over eight years, reinforcing silver's strategic importance in the global economy.

Industrial Applications Drive Demand Growth

Silver's versatility makes it indispensable across multiple high-growth sectors that are shaping the future economy. The metal plays a crucial role in several key industries:

• Electronics: Essential for high-conductivity chips and components in advanced devices
• Solar Energy: Key material in photovoltaic cells that boost energy efficiency
• Electric Vehicles: Critical for battery technologies and energy storage performance
• Healthcare: Preferred choice for medical devices due to antibacterial properties
• Telecommunications: Enables faster, low-loss signal transmission in 5G networks

These applications highlight silver's increasing relevance in sectors driving technological advancement and the green energy transition.

Supply-Demand Dynamics Create Market Tension

The demand-supply dynamics present a compelling picture for silver's market outlook. Industrial consumption has witnessed steady growth, with the following trajectory:

This represents significant growth over eight years, driven by technological advancements and green energy initiatives. The sustained increase in industrial consumption creates continued upward pressure on prices as sectors expand their silver requirements.

Supply Constraints Intensify Market Pressure

The supply side presents growing challenges for market participants. Following a historic squeeze in London, silver inventories have fallen sharply, raising concerns about availability. Shanghai inventories are near their lowest levels since 2015, adding to supply pressures in key global markets.

With the market now experiencing its fifth consecutive year of supply tightness, price volatility is expected to persist. These constraints, combined with rising industrial demand, position silver as one of the most closely watched commodities in current markets.

Market Outlook

Silver's market position appears well-supported by fundamental trends shaping the global economy. Industrial demand shows no signs of slowing, while supply constraints continue to create market tension. The metal is positioned to benefit from accelerating global trends including renewable energy adoption, electric mobility expansion, and advanced technology development.

Additionally, its recent designation as a critical mineral has boosted its investment appeal, highlighting its strategic importance in various industries.

As the world moves toward a greener and more connected future, silver's role as both an industrial input and investment asset reinforces its appeal to market participants. With the combination of supply tightness and rising industrial demand, silver continues to deliver exceptional returns, cementing its position as a top commodity performer in current markets.